Q1 2009 Costs to Buy a Business
How Much Is My Washington Business Worth?
We just received the latest Washington, District of Columbia small business valuation trend data for First Quarter 2009.
Q1 2009 Business Valuations in Washington, DC
According to statistics issued by BizBuySell.com, Washington business-for-sale listings in Q1 2009 had a median asking price of $250,000.
That compares to a median ask price of $250,000 in Q1 2008. In spite of the difficult economy, Washington, DC business valuations appear to be relatively stable.
Please understand that this is the median asking price for a business. If you want to buy a business, you may be able to buy a Washington company for much less. Similarly, some Washington businesses may be selling for much more.
Also, this is the asking price for a Washington business. When an owner lists a company for sale, they typically set a price that ends up being more than the eventual sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it depends on deal specifics. Based on this metric, a business initially priced at $225,000 might sell for between $191,250 and $202,500.
Number of Washington Businesses for Sale in the Dataset
The study data comprised 803 listings in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area. Many of the businesses in the dataset are outside of Washington, but they are in the area and so are probably representative of Washington business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Washington spanned 997 listings. The downward trend in the number of Washington business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Washington, DC
In the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area, businesses will typically sell for 0.75 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q1 2009 in this metro area.
In other words, a business that has revenues of $200,000 might list for $151,000. Remember, however, that this is in fact an average for revenue multiples in the area. Some entities will have higher revenue multiples and others will have lower revenue multiples.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $425,000 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 0.72 and the median revenue for listed businesses was $444,602.
Q1 2009 Cash Flow Multiples In Washington, DC
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area was 3.04.
So, a business with cash flows of $150,000 might have an asking price of $456,113. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
If you are interested in what cash flows are for a business in Washington, BizBuySell.com reports that the median cash flow for Washington area businesses was $100,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.13 and the median cash flow was $100,000.
Tips for Washington, DC Business Sellers
When selling a business, valuations will be based on your profits. So, be sure to sell a business at a point when your profits are doing well if you want to sell for a great price. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Washington, DC Businesses
If you are contemplating buying a business or selling a business and would like to get an estimated business valuation, we suggest you try the BizBuySell.com Business Valuation Tool. You can modify the dataset that creates business valuation estimates to meet your specific criteria. As a bonus, access to the tool is very affordable -- less than $100.
More Information on BizBuySell.com's Quarterly Reports
The BizBuySell Insight Report is a nationally-recognized economic report that tracks trends in the business-for-sale marketplace. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for more information.
Historical Data for Washington, DC Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Washington area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Washington area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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